[MUSIC] The reforms in China in fact, had an amazing impact on China's political economy. If we first look at the rural sector, China's really one of the few countries in modern history to rebalance urban and rural incomes. And let the rural areas drive the growth of the entire economy. So while we talked about an urban rural bias in many other parts of the world as well and still that in China, the reforms just drove the countryside, just drove the rural economy and then affected the entire, the national economy. And I'll show you that. Now one of the reasons why the rural areas did so well, was that there was an approximately 25% across the board increase in the price that the state paid for agricultural products. So that immediately put money into the collectives in the countryside. And as the production then began to be done by individual households, then that money actually wound up in the hands of individuals, and as they moved in as they diversified and they moved into off farm labor. Those salaries, those incomes really began to increase, so between 1978 and 1984, rural household income grew by 12.4% a year while urban incomes still grew, but by half that amount. And so here we see a major significant growth, a major difference. The rural areas actually starting to catch up for a number of years with the urban areas. And the average annual increase and the gross value of agricultural output, while it had been as low as 4% on average between 52 and 78, jumped to 7.4% in 1979 and 1984. So these are really critical times, when right after the reforms begins, 78, 79, 80, when we see these huge jumps. The average annual output of grain which had been 2.3% a year for most of the Mao era, well into 78 It grew by 5.1% a year in these years. Then the quality of food in the cities, not just the countryside, improved. And I can remember when Chinese traditional food, one of the things that people like to do is to eat soybean milk, hot soybean milk in the morning and what's called called Youtiao, sort of fried dough sticks. For any of you who have been to Taiwan, I mean you could see this all the time. That stuff just didn't exist in China, in the cities when I lived there in 1974 to 1976. But by the early 80's, this was starting to happen. So it really improved the quality of food that people were able to eat in the cities. And here we can see two pictures that I took when I was living in the countryside outside of Nanjing in the spring of 1981. I was doing research there for my doctoral thesis, and as I was doing this research, the family started to break up, the collective started to break up the land and families started to farm on their own. And so here's examples of a family, and then here an older woman, who probably remembered what it was like to be a private farmer back in the 1950s before collectivization. So she was quite enthusiastic about going out and doing some agricultural work. And here, you can really see this huge growth. The average annual growth in agriculture in 1978 through 2012. And here you can see the incredible impact in terms of this growth, the impact of decollectivization, right? The collective farms were no longer being farmed with people working as a team, working together but the land was divided up into households, really started to become much more widespread around 1981. Started a little bit '78, '79, but really began around 1981-82. By 83 the land had been divided up among all the families, all the households in China. Not owned by them, but divided up and farmed by them. And so, you can see as here we have already 80. This would be what? 80. So 81, 82. You can see that the impact of that dividing up the family land and letting individual family, the collective land, and letting individual families farm it, really had a huge increase in terms of output. And as I said we also know that this had a very large impact in terms of, from the price increase that the state gave. So, the political impact in some ways of this was also very significant, because in the early stages of the reform the the leadership became quite positive. Dung Sho Ping, people were very keen about Dung and other reformers, Josey Young, Whoya Bung who will all be driving agricultural policy in and being very influential in reform during the entire 1980 period. They really got an upsurge of support from people in the countryside and in the cities, because everybody's life was starting to improve, right? And in terms of the peasant families. It was actually quite amazing if you stop and, and as you read this slide, if you think about it. So, 80% I would estimate, 80% of the peasant families in this period, because they had more money, they were able to renovate their homes. And that meant that the mud walls were replaced with brick walls. Thatched roofs were replaced with tiled ones, dirt floors were replaced with concrete. Floris, and in fact in the areas around major cities a lot of peasants started to have two story and three story homes. Now if you figure the rural Chinese make up about 18% of the world's population, and if 80% of them significantly improved the quality, upgraded the quality of their homes, then in fact rural reform helped 14.5% of the world's inhabitants to significantly Upgrade their homes. That's just amazing, right? That's the largest housing boom probably in world history. So it's no doubt that had a big impact on people's support. For the party and for the leadership, but moreover, the fact that so much more money flowed into the countryside that the peasants were in a position to demand a lot more consumer durable goods. And that as they started to demand those consumer durable goods, light industrial sectors. I mentioned before there had been too much heavy industry. Now all of a sudden there was a big demand for light industrial goods and this table really shows some pretty amazing changes, some pretty amazing shifts in the percentage of families that owned many of these consumer goods. So this table is the Rural Household Possession of Consumer Goods. Shift between '78 and 1995, right, per hundred households. So, for example, in 1978 there would be 30% of all the households in rural China had a bicycle. Right? So there were 30 bicycles for each 100 households. Within seven years, that was 80 bicycles for every 100 households, and by 1990, there was more than one bicycle in every household. It had gotten up to 1.1 bicycles, or 1.2 bicycles for every household. Wristwatches which could really drive a lot of light industrial factories. Right? Only 27 wristwatches per 100 households in rural China. So each household, not that many households actually had watches within seven years, again, more than one watch per household, right? 1.2 watches, 1.3 watches per household. All of a sudden there were millions of watches, were now being manufactured. And this would drive, this actually drove the urban economy, and the suburban and, in part, the rural economy. Just worth looking at here in terms of washing machines. So by 1995, 17 Households out of every 100. So 17% of households actually had, in the countryside, right, this is rural, had a washing machine. Which liberated women enormously. It meant that so many fewer women had to stand there and tediously just be doing the washing machine on those wooden, scrubbing it on those boards right? On those wooden boards. And even here too in terms of colored TV sets, 17% of all the families in rural China. By 1995 had a color TV set. So one is the manufacturing. You're talking something like 17 million I think I calculated. Something like 17 million colored TV sets had to manufactured by this time for this number to exist. But it just improved dramatically the quality of people's lives in rural China, whereas in the Maui or some of them felt so poor. Now all of a sudden they had a lot more goods, and can be much more positive about their lives.